* Swedish industrial orders rise 0.4 percent in March from Feb
* Orders show tentative signs of recovery, analysts say
* Production continues to decline, down 2.8 percent mo/mo
(Adds analyst comment, detail, background)
STOCKHOLM, May 7 (Reuters) - Swedish manufacturers saw tentative signs that the headlong tumble in market demand may be bottoming out with industrial orders inching up in March from February, statistics office data showed on Thursday.
Order bookings rose 0.4 percent on the month to put the year-on-year decline at 20.0 percent -- significantly less steep than the 30.3 percent slide registered in February.
The statistics office said industrial production fell a monthly 2.8 percent in March for an annual fall of 22.9 percent.
Global demand for the products manufactured by Sweden's top-flight exporters has evaporated and the economy faces its worst recession since the 1940s as manufacturers ranging from world number two truck maker Volvo to SKF, the world's biggest bearings maker, scramble to cut costs and scale back capacity.
"RAY OF LIGHT"
The order intake figures fuelled hopes that demand was at least stabilising.
"New orders ... came in better than I had expected and that is the small ray of light -- that one is seeing some signs of improvement," RBS analyst Peter Kaplan said. "That is probably what the market will take to heart, that we will see GDP ... bottom out during the first quarter."
Swedish exporters have benefited from a fall in the Swedish crown since the global financial crisis intensified during the second half of last year. The figures showed new orders in the export market rose 4.8 percent in March from February.
"Even if it is too early to draw any conclusions from the figures for the export market alone, it is noteworthy that we have seen a strong rebound for other export-dependent countries and that could turn out to be the case for Sweden as well," Handelsbanken analyst Stefan Hornell said.
But any tentative upturn would do little to alter the reality of a huge contraction for the Nordic country's economy in the first three months of the year.
"If you look at the services and industrial data combined, GDP looks set to fall at an annual rate of just over 6 percent," Hornell said.
(Editing by Ruth Pitchford)